As South Africa grapples with economic uncertainty – exacerbated by internal divisions within the Government of National Unity (GNU), reduced US aid, and new tariffs—there’s growing speculation that the country will pivot to alternative global alliances.
This shift could have implications for the residential property market, particularly in attracting foreign direct investment (FDI).
Trade flows and real estate are closely linked. Economic activity, job creation, and income growth stimulate urbanisation and fuel housing demand. International trade often brings foreign investment – and real estate remains a popular, resilient asset class.
However, global tensions can disrupt this relationship. The 2018 US–China trade war is a case in point, introducing uncertainty and market volatility in both countries. Similar friction between the EU and the US may now prompt investors to seek more stable real estate options elsewhere.
Could South Africa benefit by strengthening ties within groups like the G20 or BRICS?
A recent Knight Frank Wealth Report showed that all G20 countries failed to meet annual housing targets over the past five years, leading to rising house prices and rents.
Meanwhile, data from the Bank for International Settlements revealed that real residential property prices in China, India, and South Africa – three BRICS members – declined by 14%, 11%, and 9% respectively.
Dr Stravos Nicolaou, a member of South Africa’s BRICS Business Council, stated that the US – South Africa’s second-largest trading partner after China – remained essential to SA’s economic stability.
He explained that it was not in the country’s best interest to ignore US policy shifts.
“We also needed to trade with the East, South, and West, and attract investment from all three regions,” he noted. “But nor could we dismiss the opportunities that resided within BRICS.”
He pointed out that the combined GDP of BRICS had exceeded that of the G7. “That said to me that there were opportunities there. In order to realise them, South Africa had to adopt a non-aligned stance.
India had done this well – it traded with both Russia and the US,” he said. “No one was saying trade with the US must stop. In fact, we should have been looking to grow it.”
Nicolaou also warned of the potential fallout if the US failed to renew South Africa’s eligibility under the African Growth and Opportunity Act (AGOA). The preferential trade agreement gives eligible African nations duty-free access to US markets for goods such as vehicles, citrus, and wine.
With the agreement set to expire in September, powerful US lobbies argue that South Africa- classified as a middle-income economy – should no longer qualify.
If AGOA were withdrawn, the ripple effects could undermine the mid-tier property market, even if the luxury segment remains resilient. Nicolaou emphasised the need for urgency: “Given the geo-strategic and tectonic trade shifts we had seen in recent weeks, we needed to do a trade deal with the US, especially if AGOA was diluted or not reauthorised.”
High-net-worth individuals (HNWIs) from BRICS countries have already reshaped the luxury real estate market, according to Geoff De Weaver, CEO of Limitless USA LLC.
“BRICS buyers were injecting fresh energy into the luxury market,” he said, “demanding sustainable, tech-savvy homes that reflected their cultural values.”
Chinese investors, once among the biggest players in the US market, gravitated toward political stability and a transparent legal framework.
Indian and Brazilian investors, on the other hand, were drawn by a booming tech sector and relative safety compared to domestic options. Russian buyers sought real estate as a hedge against rouble instability and economic turbulence.
“For these buyers, the location was just as important as the property itself,” De Weaver explained. “They were willing to pay a premium for homes with world-class views, privacy, and access to top-tier amenities.”
In his blog, De Weaver also noted that BRICS buyers and developers were “reshaping market dynamics, creating increased competition for prime properties and driving innovation in luxury developments.”
South Africa offers a unique opportunity for these investors, said Nicolaou. “We had properties valued at $94 million, especially in the Cape,” he explained.
“Tourism was going to be catalytic in attracting global HNWI property investors, and South Africa was very focused on this.”
He said the country needed to tap into new wealth coming from India and China. “These nations had significantly grown their wealth status. They had hugely mobile populations – both wealthy and middle class – who might consider buying property here,” he said. “In many cases, these investors would also invest in businesses. We needed to capitalise on that.”
Data from the National Association of Realtors (NAR) in the US shows declining confidence in the housing sector, largely due to fears of recession and trade policy shifts. South Africa, by contrast, may stand to benefit if it positions itself effectively.
The Knight Frank Wealth Report found that 29.8% of HNWIs in the next generation are prioritising real estate – especially luxury property – as a key investment. Nicolaou said this should be a wake-up call for South Africa.
“This was a chance for us to encourage FDI into South African real estate, especially among the BRICS,” he said.
“But we also needed to fish in all the seas. BRICS had a lot of potential, but investment decisions must always serve the best interests of the country and its people.”
